Rosebank deal 'cements Equinor's commitment to the UK'

Speaking after Equinor confirmed it was buying Chevron’s stake in Rosebank, Kevin Swann, from Wood Mackenzie’s Europe upstream research team said: “This deal cements Equinor's commitment to the UK upstream sector.

“Those with long memories will recall that Statoil, as Equinor was then, sold its original interest in Rosebank to OMV in 2013 at a commanding price.

"With this deal, Equinor is returning at a good time in the industry cycle.

“We believe this deal is good for the project, the other partners in the project, and the UK upstream sector. Equinor can come in and move this project forward.”

Mr Swann added: “Rosebank has been an on-off affair for Chevron since it was discovered in 2004.  The US major had been weighing up development options for a number of years, but hadn’t made a final investment decision. Rosebank may have may be struggling to compete for capital within Chevron’s low-breakeven tight-oil portfolio.

“Selling its stake in Rosebank to Equinor could spell the end for Chevron in the UK and Europe. It has already moved on from Norway and Denmark, and is looking to offload its UK North Sea assets.

“If all the sales go through, it would leave Clair as its only UK asset – the 19.42% stake is valuable, but may not be enough for Chevron to retain a UK presence.”

He said: “High development costs have blighted Rosebank over the years. The field lies is in more than 1000 metres of water, so it will be expensive to develop. However, we believe Equinor sees an opportunity to re-scope the project and reduce costs. It has done similar work on Norway’s Johan Castberg.

“Until now, Equinor’s only significant development project remaining in the UK was Mariner, a heavy oil field, holding 322 million barrels of oil equivalent, that is due to start production by the end of the year.

“Equinor also has some interesting recent discoveries and exploration prospects to go after but, to remain committed to the UK, always needed more of a foothold. This deal cements its commitment to the UK upstream sector."